TORONTO, Feb 24 (Reuters) - Toronto’s main stock index closed sharply higher on Tuesday as oil and gas issues climbed with rising crude prices, while financials strengthened as fears over the fate of the troubled U.S. banking sector eased.

In see-saw action, the benchmark index swung nearly 300 points from trough to peak, with the upside supported by strength in energy issues as oil settled nearly 4 percent higher at $39.96 a barrel. [ID:nSIN379847] The main pressure to the downside came from weaker gold prices.

The heavily weighted financial services sector led the TSX higher, and finished the day up 7.2 percent. The sector followed U.S. stocks higher after Federal Reserve Chairman Ben Bernanke signaled that nationalization of major U.S. banks was not at hand. [ID:nN24405808]

As well, markets were higher ahead of U.S. President Barack Obama’s speech on Tuesday night, said Fergal Smith, managing market strategist at Action Economics. The speech is expected to lay out the blueprint for the administration’s economic plans.

“Part of it is the market is quite short financials so I think there’s an incentive to cover shorts ahead of Obama’s speech tonight,” Smith said.

“In Canada, in particular, we’ve got the bank earnings starting tomorrow so there’s some incentive, for the speculative guys, to take some risk off the table.”

The Toronto Stock Exchange S&P/TSX composite index .GSPTSE closed up 211.66 points, or 2.77 percent, at 7,859.33, with nine of its 10 main groups advancing.

The index rose sharply at the open, rebounding from multi-year closing lows ion both Canadian and U.S. markets on Monday. At one point on Tuesday, however, the index retreated to touch its lowest level since October 2003.

The market volatility signals “there’s a lot of uncertainty out there,” said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

“We wouldn’t have such big swings unless there was a great deal of uncertainty,” he said.

Influential issues that powered higher included Canadian Natural Resources (CNQ.TO), up 8.8 percent at C$39.74, and Suncor Energy (SU.TO), which climbed 6.8 percent to C$22.76.